The BBC’s recent Panorama episode has reignited discourse surrounding the effectiveness and vulnerability of whistleblowing in the fight against financial crime. Panorama claimed that a big four accountancy firm was involved in the cover up of British laundered drug money by organised criminal gangs operating through Dubai. The BBC claims that $5.2 Billion was laundered through this network converting UK drug money into gold in Dubai. According to the programme accountancy firm EY had failed to report activity relating to the money laundering despite suspicions being raised by its employees. The focal point of the episode explored the role of whistle blowers had in the case whilst illustrating the vulnerability that whistle-blowers have to retaliatory measures from employers and the wider industry.
Whistle-blowers play a crucial role in protecting UK economic interests whilst also limiting criminality in financial services. Those who do blow the whistle on criminality have valuable inside knowledge relating to financial misconduct however, often individuals are left vulnerable as a result. It is imperative that organisations have effective policies and procedures in place that encourage whistleblowing in relation to financial crime. A lack of action has a profound impact on confidence and trust in whistleblowing systems, meaning employees are far less likely to engage in whistleblowing reporting.
An effective whistleblowing framework can achieved through: This can be achieved through:
Organisational Framework: Organisations need to create effective channels for receiving reports, that are operated in total confidentiality of the identities of whistle-blowers and any related third party. Frameworks for such channels must allow for reporting via multiple methods of communication including but not limited to writing, telephone, voice messaging and physical meetings. Timeframes are also necessary for those reporting to provide feedback and any follow up reporting. Organisations should make accessible information regarding the conditions and procedures for reporting financial misconduct in order to facilitate confidence in reporting.
Corporate Governance: Set from the top, employees need to know where its organisation stands on whistleblowing and in doing so assuring individuals that they will be protected should they decide to blow the whistle. This can be achieved in part through fostering a culture of trust, transparency and integrity between an organisation and its employees. If employees believe that an organisation is committed to whistleblowing and that leaders are committed to listening to and acting upon reports received then individuals are more likely to blow the whistle.
Legal support - Whilst whistle-blowers are protected through the Public interest Disclosure Act 1998, many feel that are not sufficiently safeguarded when doing so. April 2019 has seen the inclusion of the EU Whistleblower Protection Directive to further protect the rights of individuals. Significantly the directive safeguards against retaliation and reprisals to prevent the suspension, demotion and intimidation of the whistle-blower. Such a law provides valuable legal weight for whistle-blowers such as those impacted in the EY case.
It is vital that organisation engage with all three elements to create an effective whistleblowing system that is conducive to fighting financial crime.
What can lysis do to help
Assessing the maturity and effectiveness of the whistleblowing framework;
Enhancing existing policies and procedures, to ensure the most complete and transparent whistleblowing framework;
Provide training on whistleblowing across all sections of your organisation.